Katrina, Rita Fuel Storm of Inflation ; Surge in Energy Costs Jolts Consumer Prices

Summary

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WASHINGTON - Consumer prices soared last month by the biggest amount in a quarter-century, propelled by Hurricanes Katrina and Rita and the record gasoline costs in their wake. The storms caused industrial production and consumer confidence to plunge, raising new worries about the economy's ability to bounce back.

The Labor Department reported Friday that inflation jumped 1.2 percent last month. Ninety percent of the increase came from a record-shattering 12 percent surge in energy prices, reflecting tight supplies after widespread shutdowns of refineries and oil and natural gas production along the Gulf Coast.

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Katrina, Rita Fuel Storm of Inflation ; Surge in Energy Costs Jolts Consumer Prices

Those shutdowns contributed to a 1.3 percent drop in industrial...

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